FIRST MODIFICATION AND AMENDMENT AGREEMENT
THIS FIRST MODIFICATION AND AMENDMENT AGREEMENT (“Agreement”) is made effective this 4th day of November, 2011 (the “Execution Date”), by and among NXT Nutritionals Holdings, Inc., a Delaware corporation (the “Company”), and each of the investors set forth on the signature page hereto (individually, a “Holder” and collectively, the “Holders”). Parties to this Agreement are individually referred to as the “Party,” and collectively referred to as the “Parties.” Capitalized terms used herein but not otherwise defined shall the meanings ascribed to them in the Transaction Documents (defined below).
RECITALS
WHEREAS, the Company is a public company currently traded on the Over the Counter Bulletin Board.
WHEREAS, on August 27, 2009, the Company completed a private offering of an aggregate subscription amount of $3,173,000 of gross proceeds through the issuance of investment units to certain accredited investors at a purchase price of $50,000 per unit and consisted of (i) a three year convertible debenture (the “2009 Debentures”) in the principal amount of sixty five thousand dollars ($65,000) bearing annual interest at a rate of 10% and convertible into shares of Company common stock at a conversion price of $.40 per share, (ii) five year Series A warrants to purchase 100% of Company common stock underlying the 2009 Debentures at an exercise price of $.40 per share (the “Series A Warrants”), and (iii) five year Series B warrants to purchase 100% of the Company common stock underlying the 2009 Debenture at an exercise price of $0.60 per share (the “Series B Warrants” and, together with the Series A Warrants, the “2009 Warrants”) (collectively, the “2009 Warrants” and together with the 2009 Debentures are referred to as the “Securities”).
WHEREAS, on October 13, 2011, the Company and NXT Investment Partners, LLC, a Delaware limited liability company (“NIP”) executed a term sheet (the “Term Sheet”) pursuant to which NIP agreed to make an investment (the “Investment”) in the Company in the form of a cash loan to the Company equal to a minimum of $1,000,000 and a maximum of $1,500,000 of gross proceeds (the amount loaned shall be referred to as the “Principal Amount of the 2011 Note”) in exchange for a four-year promissory note (“2011 Note”) and shares of Series A Preferred Stock (“Preferred Stock”) of the Company upon the terms and conditions set forth in the Term Sheet, a summary of which is attached hereto as Exhibit A.
WHEREAS, the Company and NIP have agreed to proceed with the Investment contemplated by the Term Sheet only if the holders of 65% of the aggregate outstanding principal amount of the 2009 Debentures agree either (i) to consent to the proposed Investment including the issuance by the Company of the 2011 Note and the Preferred Stock, or (ii) to convert their 2009 Debentures into common stock of NXT.
WHEREAS, in order to enable the Company to raise additional funds from NIP and other third parties and restructure the financial and other terms of the 2009 Debentures and Series C Warrants, the Parties desire to amend the Transaction Documents to modify the rights and obligations of the Company and the Holders set forth therein. The 2009 Debentures and the 2009 Warrants and the amendments thereto are collectively referred to as the “Transaction Documents.”
NOW THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the Parties hereby agree as follows:
1. The Holder hereby consents to the issuance of the 2011 Note and the Preferred Stock to NIP in the Investment and the other transactions contemplated by the Term Sheet (including the execution of a security agreement and grant of a first priority lien on the Company’s assets by the Company and the execution of guarantees by the Company’s subsidiaries.
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2. The 2009 Debentures and the 2009 Warrants are hereby amended and modified as follows:
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(a)
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the Conversion Price (as defined in the 2009 Debentures) and the Exercise Price (as defined in the 2009 Warrants) shall be $0.25 per share of common stock;
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(b)
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all Holders of Securities waive their rights under Section 5(b) of the 2009 Debentures and under Section 2(d) of the 2009 Warrants; and
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(c)
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all Holders agree that the Maturity Date (as defined in the 2009 Debentures) shall be amended to extend the Maturity Date to the date which is 48 months from the closing of the Investment.
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3. The Company shall file with the Securities and Exchange Commission, a Form 8-K describing the material terms of the modifications contemplated hereby within four (4) Business Days following the Effectiveness.
4. Each Holder confirms, as to itself, the accuracy of the representations and warranties set forth in Sections 4(A) through (F) of the 2009 Debentures with respect to the 2009 Debentures and 2009 Warrants held by such Holder and the modification to such Securities pursuant to this Agreement.
5. All questions and issues concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof. Each Party agrees that all legal proceedings concerning the interpretation, enforcement and defense of this Agreement shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each Party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding. Each Party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such Party at the address in effect for notices to it under the 2009 Debenture and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each Party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If any Party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorney’s fees and other costs and expenses incurred.
6. The Company represents and warrants to the Holders that (i) it has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and therein; (ii) the execution and delivery of this Agreement by the Company have been duly authorized by all necessary action on the part of such Company and no further action is required by such Company, its board of directors or its stockholders in connection therewith; (iii) this Agreement has been duly executed by the Company and, when delivered in accordance with the terms hereof will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (a) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (c) insofar as indemnification and contribution provisions may be limited by applicable law and (iv) the Company has reserved a sufficient number of authorized shares of common stock for issuance upon conversion of the 2009 Debentures and exercise of the 2009 Warrants.
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7. If the terms and provisions contained in the Transaction Documents in any way conflict with the terms and provisions contained in this Agreement, the terms and provisions contained in this Agreement shall prevail.
8. Except as amended and modified by this Agreement, all of the terms, representations, warranties, covenants, indemnifications, agreements and all other provisions of the Transaction Documents shall continue to remain in full force and effect.
9. Capitalized terms and phrases used in this Agreement without definition shall have the respective meanings set forth in the Transaction Documents, unless otherwise specified.
10. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature.
11. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.
12. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
13. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed by the Company in the case of an amendment, and the Holders holding at least 67% of the then outstanding principal amount of the 2009 Debentures, except that any amendment that relates to a provision of the 2009 Warrants may only be waived, modified, supplemented or amended by a written instrument signed, by the Company (in the case of an amendment) and the Holders of 2009 Warrants to purchase at least 65% of the shares of common stock issuable upon exercise of the then outstanding 2009 Warrants. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
14. This Agreement will become effective at the time that it is joined into by the Company and the Requisite Holders (the “Effectiveness”), and the amendments and modifications made hereunder shall be binding on all Holders executing this Agreement as applicable. “Requisite Holders” means 65% of the outstanding principal amount of the 2009 Debentures.
15. Notwithstanding the foregoing, if the Company does not receive the Investment of at least $1,000,000 principal amount of 2011 Notes on or prior to sixty (60) days following the Effectiveness, then this Agreement shall be null and void and of no force and effect and the terms of the Transaction Documents shall be as in effect immediately prior to the Effectiveness.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused its respective signature page to this First Modification and Amendment Agreement to be duly executed as of the date first written above.
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COMPANY:
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By:
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/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ (“▇▇▇▇▇▇▇”) ▇▇▇▇▇▇▇▇
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Title: Chief Executive Officer
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HOLDER
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_____________________________________
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Name:
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Principal Amount of 2009 Debenture held by Holder: $_______________
Number of Conversion Shares held by Investor:
_________________
Number of Warrants held by Investor:
_________________
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